A new report from the OECD shows that across 22 member countries for which information is available, hourly wages of workers whose parents had a tertiary degree are significantly higher, on average, than hourly wages of workers whose parents had lesser qualifications.

In other words, people’s economic outcomes are to a considerable extent associated with the education of their parents. Australia is shown to be neither the best nor the worst performer in this respect.

The OECD report shows that the wage premium of Australians whose parents had a tertiary education compared with that of Australians whose parents had less than tertiary education was comfortably below premiums in the US, the UK and Italy, but higher than those in Denmark, the Netherlands and Canada.

However, the issue of intergenerational mobility – the extent to which parents’ education, occupation or income determines that of their children after they in turn reach adulthood – is a sensitive subject in Australia, which has historically prided itself on being a classless society.

Australians have been trained to remain uncharacteristically silent about the origins of social disparity.

The Melbourne Declaration, Australian governments’ overarching policy document on the aims of education, boldly states that Australian schooling should:

… ensure that socioeconomic disadvantage ceases to be a significant determinant of educational outcomes.

This begs the question – to what extent has the relationship between the education, occupation or income of parents and their children in Australia changed over recent decades? Is intergenerational mobility increasing or decreasing?

Even though intergenerational mobility is hard to measure (not least in countries with high levels of immigration), existing evidence suggests that in Australia, parents’ origins and circumstances are a significant determinant of their children’s outcomes.

Little has changed over time

Evidence suggests this association may not have changed much over the past several decades. For example, recent research argues that among Australian children aged 4-12 years, the socioeconomic gradient associated with behaviour difficulties, persistence in behaviour difficulties over time and reading skills has remained the same or strengthened since the 1980s.

Other research concludes that the relationship between parents’ ranking on a socioeconomic status scale and their children’s ranking on academic performance scales changed little between 1975 and 2006.

Australia is not alone. Research for other countries for which data are available also suggests little change in relative intergenerational mobility over the past several decades.

Why are inequalities in intergenerational mobility hard to shift?

A number of trends suggest the situation has actually improved in many respects. First, relativities (that is, the average ranking of children on a given achievement scale relative to the average ranking of their parents on a given socioeconomic status scale) may not have changed greatly, but the current generation of young adults is nevertheless better educated and has a higher standard of living, on average, than their parents.

This is what the British sociologist John Goldthorpe refers to as “absolute mobility”.

For example, ever more Australians are gaining higher and higher qualifications (37% of 25-34 year olds had a bachelor degree or higher in 2014, compared with 27% in 2004).

Second, research suggests that Australia has become more of a meritocracy since the 1960s – it’s not so much who you know any more, but what you know.

In-depth research in both Australia and in other countries shows that middle-class parents and their children tend to be the biggest winners in meritocratic systems. They are generally adept at negotiating their way through education systems, while parents and students from disadvantaged backgrounds can find the process much more problematic.

Inequality in the social, economic and cultural resources that parents can bring to bear on their children’s development tends to leave the children of parents with fewer resources at a disadvantage in this intergenerational race.

In recent decades, parents have invested more heavily in their children’s education. Private expenditure on education has increased in real terms since the 1980s.

A large proportion of this increased expenditure has been concentrated in high-income households. This trend coincides with an increase in income inequality over the same period.

Intergenerational social mobility does not appear to have improved. However, increased income inequality notwithstanding, neither does it appear to have significantly deteriorated.

Is this the result of policy, or in spite of it? And what needs to be done if the aspirations of the Melbourne Declaration are to be more fully achieved and intergenerational mobility is to be accelerated?

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Leonardo DiCaprio plays Jay Gatsby in the The Great Gatsby. Jay’s story has been used by economists to explain the combination of unequal distribution of income and less economic mobility.
Reuters/Andrew Kelly

Assistant Treasurer Josh Frydenberg’s figures were taken form the Intergenerational Report, but we should be wary of economic projections that claim to see 40 years into the future.
AAP Image/Joel Carrett